New Delhi

The Federation of Thai Industries reported on Tuesday that automobile production in Thailand experienced a significant decline of 16.62 per cent in July compared to the same month in the previous year, with output falling to 124,829 units. This reduction was primarily attributed to a decrease in domestic sales within the country.

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While the July figures represent a concerning trend, they actually show a slight improvement from June's performance, which saw a more substantial year-on-year decline of 20.11 per cent. However, it's important to note that this marks the twelfth consecutive month of contraction in the Thai automotive manufacturing sector.

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Looking at the broader picture, the cumulative car production for the first seven months of the year, spanning from January to July, showed an even more pronounced contraction of 17.28 per cent compared to the same period in the previous year. The total output during this time frame amounted to 886,069 units.

Surapong Paisitpattanapong, who serves as the spokesperson for the automotive industry division of the Federation of Thai Industries, provided additional insight into the situation during a news briefing. He emphasised that the production intended for domestic sales has seen a particularly sharp decrease, with pickup trucks being especially affected by this downturn.

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The federation has identified tightened auto loan policies implemented by banks as a key factor contributing to the weakened domestic sales. This credit tightening is largely a response to the high levels of household debt prevalent in the country.

The impact of these factors is evident in the July domestic car sales figures, which showed a year-on-year decline of 20.58 per cent. While this represents a significant drop, it actually shows some improvement compared to June, which had witnessed an even steeper annual decline of 26.04 per cent.

Thailand holds a prominent position in Southeast Asia's automotive industry, serving as the region's largest production hub and a crucial export base for several major global automakers, including industry giants like Toyota and Honda. The country is particularly known for its production of pickup trucks, which constitute a significant portion of its automotive manufacturing output.

In light of the ongoing challenges, the Federation of Thai Industries has revised its projections for the year. The domestic sales target has been substantially reduced from the initial forecast of 750,000 units to a more conservative estimate of 550,000 vehicles. Similarly, the production target for the year has been adjusted downward from 1.9 million vehicles to 1.7 million units. These revisions reflect a significant scaling back of expectations compared to the previous year's production volume of 1.84 million vehicles in 2023.

These developments highlight the complex challenges facing Thailand's automotive sector, which is grappling with both domestic economic pressures and broader global market dynamics.